Manufacturing stutters forward in the Eurozone as PMI dips slightly

Jake Cordell
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German manufacturers tightened their grip on the Eurozone's production sector in July
German manufacturers tightened their grip on the Eurozone's production sector in July (Source: Getty)

Factories in the Eurozone entered the summer with a slight wobble, as output dipped and fundamental weaknesses in the manufacturing sector appeared stubborn.

The purchasing managers' index (PMI) for manufacturing across the single currency bloc slipped to 52 in June, down from 52.8 in July, on a reading where scores above 50 mark expansion. It was the 37th consecutive month of expansion for the continent's manufacturers.

The headline figure, however, betrays a wide divergence across Europe. Germany and the Netherlands recorded the fastest expansions, while the contraction in France intensified in July, following the economy grinding to a standstill in the second quarter of the year.

Although Greece's score came in below 50, hiring expectations among firms were running at a nine-year high in a spot of bright news for the troubled economy.

The PMI for the UK's manufacturing industry, also out this morning, came in worse than expected and was down on a post-referendum flash estimate, raising fears about a wider slowdown and boosting the chances of the Bank of England unlocking the door on fresh monetary stimulus when it meets on Thursday. Various surveys of businesses in the Eurozone have shown few signs that the EU referendum is explicitly weighing on business or consumer confidence across the Channel.

Chris Williamson of Markit said: "Although signalling an easing in the pace of expansion in July, the PMI points to steady manufacturing growth. The problem is that growth is looking increasingly lop-sided, which will worry policymakers and add to calls for further stimulus from the European Central Bank."